Feb 22, 2016: Market Economy Status (MES) for China likely

Feb 22, 2016: Market Economy Status (MES) for China likely

General Studies: Daily Capsule

Curtain Raiser –News Update (Feb 22, 2016)

Market Economy Status (MES) for China likely:

Market Economy Status (MES) for China as per the 2001 agreement (Protocol on the accession of China to the WTO)	China likely to be granted “Market Economy Status” under World Trade Organization (WTO) norms from December 2016
Implication for India	It will severely limit India’s ability to resort to anti-dumping as the authorities (Directorate General of Anti-Dumping and Allied Duties, DGAD) will have to accept the production costs and selling price in China as the benchmark
Present Practice in anti-dumping duty	A country can calculate the ‘dumping margin’ on the basis of a comparable export price to an appropriate third country and by ‘constructing’ the production cost with ‘reasonable’ additions {ignoring selling price and production costs in China}
What is Dumping?	Dumping is an unfair trade practice of exporting goods to another country at a price lesser than what is paid in the exporting nation or their normal production cost, thereby distorting international trade and causing injury to the domestic manufacturers of the goods in the importing country
Countries recognizing China’s MES	China is recognised as a market economy by Russia, Brazil, New Zealand, Switzerland and Australia
Countries supporting/likely to support China’s MES	The UK, The Netherlands, and Nordic countries support China’s market economy status. Germany is, in principle, supportive, but is interested in safeguards for sensitive industries, while Italy is strongly opposed

Source: India studying impact of market economy status for China by Arun S, Feb 22, The Hindu
& https://euobserver.com/eu-china/131801

Further reading on Anti-dumping and WTO: https://www.wto.org/english/tratop_e/adp_e/adp_info_e.htm

Understanding WTO:

https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm